Khawaja Dawood/The Santiago Times Staff
SANTIAGO – The World Bank Group’s (WBG) annual report “Doing Business 2018: Reforming to Create Jobs” has placed Chile among the best Latin American economies in terms of ease of doing business.
WBG’s recent flagship report compares and provides objective measures of business regulations for domestic firms and their enforcement across 190 countries, as well as selected cities at the subnational and regional level.
In the report, New Zealand ranked at the top, Somalia at the bottom, and China ended up somewhere in the middle at number 78, between the economies of Kyrgyzstan and Panama.
The latest Doing Business edition ranks the Chile in the 55th spot on a global scale and the 2nd position in Latin America.
Argentina improved its environment for doing business, while Brazil and Mexico worsened, according to the latest report.
Chile moved up two spots in Latin America and now again ranks behind Mexico, as it did two years ago, while Colombia fell two spots.
Peru stands below Mexico (49) and Chile (55), pushing Colombia (59) down to the fourth spot.
It is worth noting Peru is the only economy in the region to have improved its position this year despite the severe blow of Coastal El Niño disasters in the first quarter of 2017.
“Reforms implemented by economies in Latin America and the Caribbean continue to improve the business environment for entrepreneurs,” Santiago Croci Downes, Program Manager of The World Bank’s Doing Business Unit, said in a statement. “As the impact of these reforms spreads, we are likely to see a more dynamic private sector which will boost economic growth in the region.”
The Doing Business report, which was launched 15 years ago, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle, including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
WINNERS & LOSERS
The big winner is El Salvador, which now ranks ahead of Panama thanks to improving its score by 5.4 points.
“El Salvador earned a notable spot in this year’s global top improvers, with four reforms adopted during the past year,” The World Bank says. “These included improving the reliability of electricity by introducing a better outage management system and maintenance planning and making it easier for businesses to pay taxes by implementing an online platform for filing and payment of taxes. Other reforms covered the Doing Business areas of Dealing with Construction Permits and Trading Across Borders.”
The Dominican Republic posted the second-largest gain in its score due to three reforms, including reducing the time to start a business and improving the reliability of electricity supply.
Venezuela is the big loser, showing a 2.5 point fall in its score. It now ranks 188th worldwide, only better than other basket cases like Eritrea and Somalia.
Other major losers are Guatemala, Colombia and Panama.
BRAZIL AND MEXICO
Brazil, Latin America’s largest economy, implemented one reform to facilitate cross border trade by reducing the time for documentary compliance for both exporting and importing. In the past 15 years, Brazil has implemented a total of 18 reforms, above the regional average of 12 reforms, according to The World Bank.
Meanwhile, Mexico, the region’s second largest economy, also implemented one reform in the past year. The reform, in the Doing Business area of Getting Electricity, is aimed at improving the reliability of electricity supply. Mexico has implemented a total of 26 reforms in the past 15 years.
Aside from 28 OECD high-income economies, the 50 highest ranked economies include 13 from Europe and Central Asia, five from East Asia and the Pacific, two from Sub-Saharan Africa and one each from the regions of Latin America and the Caribbean and the Middle East and North Africa. Each region also has a relatively wide spectrum of strong and weak performers.
In OECD high-income economies, for example, New Zealand, Denmark and Korea have the highest overall distance to frontier scores at 86.55, 84.06 and 83.92, respectively. Conversely, Greece, Luxembourg and Chile have the lowest scores in this group, at 68.02, 69.01 and 71.22. However, the OECD high-income group has the smallest gap between the highest and the lowest scores, of only 18.53 percentage points.
Check out the full report here.